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9 AN ACT relating to the taxation of marijuana and other controlled sub-
10 stances; amending K.S.A. 79-5203, 79-5206 and 79-5207 and K.S.A.
11 1996 Supp. 79-5201, 79-5202, 79-5204, 79-5205, 79-5208, 79-5211 and
12 79-5212 and repealing the existing sections.
13
14 Be it enacted by the Legislature of the State of Kansas:
15 Section 1. K.S.A. 1996 Supp. 79-5201 is hereby amended to read as
16 follows: 79-5201. As used in this act:
17 (a) ``Marijuana'' means any marijuana, whether real or counterfeit, as
18 defined by subsection (o) of K.S.A. 65-4101, and amendments thereto,
19 which is held, possessed, acquired, manufactured, produced, transported,
20 transferred, sold or offered to be sold in violation of the laws of Kansas;
21 (b) ``controlled substance'' means any drug or substance, whether real
22 or counterfeit, as defined by subsection (e) of K.S.A. 65-4101, and amend-
23 ments thereto, which is held, possessed, acquired, manufactured, pro-
24 duced, transported, transferred, sold or offered to be sold in violation of
25 the laws of Kansas. Such term shall not include marijuana;
26 (c) ``dealer'' means any person who, in violation of Kansas law, holds,
27 possesses, acquires, manufactures, produces, ships, transports or imports
28 into Kansas or in any manner acquires or possesses more than 28 grams
29 of marijuana, or more than one gram of any controlled substance, or 10
30 or more dosage units of any controlled substance which is not sold by
31 weight;
32 (d) ``domestic marijuana plant'' means any cannabis plant at any level
33 of growth which is harvested or tended, manicured, irrigated, fertilized
34 or where there is other evidence that it has been treated in any other way
35 in an effort to enhance growth;
36 (e) ``dry domestic marijuana plant'' means a domestic marijuana plant
37 which has been partly or completely dried by natural or artificial means;
38 (f) ``wet domestic marijuana plant'' means domestic marijuana plant
39 which is still growing or has been recently harvested and has not yet been
40 partly or completely dried by natural or artificial means;
41 (g) ``possess'' means either actual possession or constructive posses-
42 sion.
43 Sec. 2. K.S.A. 1996 Supp. 79-5202 is hereby amended to read as
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1 follows: 79-5202. (a) There is hereby imposed a tax upon marijuana, do-
2 mestic marijuana plants and controlled substances, as defined by K.S.A.
3 79-5201, and amendments thereto, at the following rates:
4 (1) On each gram of marijuana, or each portion of a gram, $3.50;
5 (2) on each gram of a wet domestic marijuana plant, $.40;
6 (3) on each gram of a dry domestic marijuana plant, $.90;
7 (4) on each gram of controlled substance, or portion of a gram, $200;
8 and
9 (5) on each 50 dosage units of a controlled substance that is not sold
10 by weight, or portion thereof, $2,000.
11 (b) For the purpose of calculating the tax hereunder, an ounce of
12 marijuana or other controlled substance is measured by the weight of the
13 substance in the dealer's possession. the weight of the marijuana or con-
14 trolled substance includes all material, mixture or preparation that is
15 added to the marijuana or controlled substance but does not include the
16 weight of any packaging materials.
17 Sec. 3. K.S.A. 79-5203 is hereby amended to read as follows: 79-
18 5203. (a) The director of taxation secretary of revenue or the secretary's
19 designee shall administer this act. All tax payments required pursuant to
20 this act shall be made to the director secretary of revenue or the secre-
21 tary's designee, and shall be accompanied by a return upon forms devised
22 and furnished by the director secretary of revenue or the secretary's des-
23 ignee.
24 (b) The director of taxation secretary of revenue or the secretary's
25 designee shall adopt a uniform system of providing, affixing and displaying
26 official stamps, labels or other indicia for marijuana and controlled sub-
27 stances upon which a tax is imposed.
28 (c) The secretary of revenue shall adopt rules and regulations nec-
29 essary to administer and enforce the provisions of this act.
30 Sec. 4. K.S.A. 1996 Supp. 79-5204 is hereby amended to read as
31 follows: 79-5204. (a) No dealer may hold, possess, acquire, manufacture,
32 produce, transport, transfer, sell or offer for sale any marijuana, domestic
33 marijuana plant or controlled substance upon which a tax is imposed
34 pursuant to K.S.A. 79-5202, and amendments thereto, unless the tax has
35 been paid as evidenced by an official stamp or other indicia.
36 (b) Official stamps, labels or other indicia to be affixed to all mari-
37 juana, domestic marijuana plants or controlled substances shall be pur-
38 chased from the director of taxation secretary of revenue or the secretary's
39 designee. The purchaser shall pay 100% of face value for each stamp,
40 label or other indicia at the time of purchase. Each such stamp, label or
41 other indicia shall only be valid for three months after its date of issuance.
42 The director shall issue the stamps, labels or other indicia shall be issued
43 in denominations in multiples of $10. Any person may purchase any such
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1 stamp, label or other indicia without disclosing such person's identity.
2 (c) When a dealer purchases holds, possesses, acquires, manufactures,
3 produces, transports, or imports into this state marijuana, domestic ma-
4 rijuana plants or controlled substances on which a tax is imposed by K.S.A.
5 79-5202, and amendments thereto, and if the indicia evidencing the pay-
6 ment of the tax have not already been affixed, the dealer shall have them
7 permanently affixed on the marijuana, domestic marijuana plant or con-
8 trolled substance immediately after receiving the substance. Each stamp
9 or other official indicia may be used only once.
10 (d) Taxes imposed upon marijuana, domestic marijuana plants or con-
11 trolled substances by this act are due and payable immediately upon ac-
12 quisition or possession in this state by a the dealer. Interest on tax liabil-
13 ities shall accrue at the rate prescribed by subsection (a) of K.S.A.
14 79-2968, and amendments thereto, from the date the tax was due until
15 paid.
16 Sec. 5. K.S.A. 1996 Supp. 79-5205 is hereby amended to read as
17 follows: 79-5205. (a) At such time as the director of taxation secretary of
18 revenue or the secretary's designee shall determine that a dealer has not
19 paid the tax as provided by K.S.A. 79-5204, and amendments thereto, the
20 director secretary of revenue or the secretary's designee may immediately
21 assess a tax based on personal knowledge or information available to the
22 director of taxation secretary of revenue or the secretary's designee; mail
23 to the taxpayer at the taxpayer's last known address or serve in person, a
24 written notice of the amount of tax, penalties and interest; and demand
25 its immediate payment. If payment is not immediately made, because
26 collection of every assessment made hereunder is presumed to be in jeop-
27 ardy due to the nature of the commodity being taxed, the director sec-
28 retary of revenue or the secretary's designee may immediately collect the
29 tax, penalties and interest in any manner provided by K.S.A. 1996 Supp.
30 79-5212.
31 (b) The taxpayer may appeal the assessment within 15 days from the
32 date of mailing of the notice or the date of personal service of the notice
33 given pursuant to subsection (a), by requesting in writing a hearing by
34 the director on the correctness of the assessment. The hearing shall be
35 conducted in accordance with the provisions of the Kansas administrative
36 procedure act. An appeal of the assessment shall not stay the collection
37 of the assessment but shall stay the sale of real or personal property seized
38 pursuant to K.S.A. 1996 Supp. 79-5212, and amendments thereto, until
39 the director secretary of revenue or the secretary's designee rules on the
40 correctness of the assessment.
41 (c) The tax, penalties and interest assessed by the director of taxation
42 secretary of revenue or the secretary's designee are presumed to be valid
43 and correctly determined and assessed. The burden is upon the taxpayer
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1 to show their incorrectness or invalidity. Any statement filed by the di-
2 rector of taxation secretary of revenue or the secretary's designee with the
3 court or any other certificate by the director of taxation secretary of rev-
4 enue or the secretary's designee of the amount of tax, penalties and in-
5 terest determined or assessed is admissible in evidence and is prima facie
6 evidence of the facts it contains.
7 (d) In making an assessment pursuant to subsection (a), the director
8 of taxation secretary of revenue or the secretary's designee may consider
9 but shall not be bound by a plea agreement or judicial determination
10 made in any criminal case.
11 Sec. 6. K.S.A. 79-5206 is hereby amended to read as follows: 79-
12 5206. Neither the director of taxation secretary of revenue or the secre-
13 tary's designee nor a public employee may reveal facts contained in a
14 report or return required by this act, nor can any information contained
15 in such a report or return be used against the dealer in any criminal
16 proceeding, unless independently obtained, except in connection with a
17 proceeding involving taxes due under this act from the taxpayer making
18 the return.
19 Sec. 7. K.S.A. 79-5207 is hereby amended to read as follows: 79-
20 5207. For the purpose of determining the correctness of any return, de-
21 termining the amount of tax that should have been paid, determining
22 whether or not the dealer should have made a return or paid taxes, or
23 collecting any taxes under this act, the director of taxation secretary of
24 revenue or the secretary's designee may examine, or cause to be examined,
25 any books, papers, records or memoranda, that may be relevant to making
26 such determinations, whether the books, papers, records or memoranda,
27 are the property of or in the possession of the dealer or another person.
28 The director of taxation secretary of revenue or the secretary's designee
29 may require the attendance of any person having knowledge or infor-
30 mation that may be relevant, compel the production of books, papers,
31 records or memoranda by persons required to attend, take testimony on
32 matters material to the determination, and administer oaths or affirma-
33 tions. Upon demand of the director of taxation secretary of revenue or
34 the secretary's designee or any examiner or investigator, the court shall
35 issue a subpoena for the attendance of a witness or the production of
36 books, papers, records or memoranda. The director of taxation secretary
37 of revenue or the secretary's designee may also issue subpoenas. Diso-
38 bedience of subpoenas issued under this act is punishable by the district
39 court of the district in which the subpoena is issued, or, if the subpoena
40 is issued by the director of taxation secretary of revenue or the secretary's
41 designee, by the district court of the district in which the party served
42 with the subpoena is located, in the same manner as contempt of district
43 court.
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1 Sec. 8. K.S.A. 1996 Supp. 79-5208 is hereby amended to read as
2 follows: 79-5208. Any dealer violating this act is subject to a penalty of
3 100% of the tax in addition to the tax imposed by K.S.A. 79-5202 and
4 amendments thereto. In addition to the tax penalty imposed, a dealer
5 distributing or possessing marijuana or controlled substances without af-
6 fixing failing to affix the appropriate stamps, labels or other indicia as
7 provided by K.S.A. 79-5204, and amendments thereto, is guilty of a se-
8 verity level 10 felony.
9 Sec. 9. K.S.A. 1996 Supp. 79-5211 is hereby amended to read as
10 follows: 79-5211. All moneys received from the collection of taxes im-
11 posed under the provisions of K.S.A. 79-5201 et seq., and amendments
12 thereto, and 25% of all moneys collected from assessments of delinquent
13 taxes and penalties imposed thereunder, shall be remitted to the state
14 treasurer who shall deposit the entire amount thereof in the state treasury
15 and credit the same to the state general fund. The director of taxation
16 secretary of revenue or the secretary's designee shall remit 75% of all
17 moneys received from the collection of assessments of delinquent taxes
18 and penalties imposed pursuant to the provisions of K.S.A. 79-5201 et
19 seq., and amendments thereto, as follows: (a) If the law enforcement
20 agency which conducted the investigation is a county agency, the entire
21 amount shall be deposited in the county treasury and credited to a special
22 law enforcement trust fund for use solely for law enforcement and crim-
23 inal prosecution purposes; (b) if the law enforcement agency which con-
24 ducted the investigation is a city agency, the entire amount shall be de-
25 posited in the city treasury and credited to a special law enforcement
26 trust fund for use solely for law enforcement and criminal prosecution
27 purposes; and (c) if more than one law enforcement agency is substantially
28 involved in the investigative process, the amount shall be distributed
29 equally among the city, county and state law enforcement agencies in-
30 volved and credited to the appropriate county and city special law en-
31 forcement trust funds and state law enforcement agency funds unless an
32 alternate distribution is mutually agreed upon by the law enforcement
33 agencies involved and submitted in writing to the director of taxation
34 secretary of revenue or the secretary's designee. Funds received by city
35 and county treasurers shall not be considered to be a source of revenue
36 to meet normal operating expenses of law enforcement agencies.
37 Sec. 10. K.S.A. 1996 Supp. 79-5212 is hereby amended to read as
38 follows: 79-5212. (a) Whenever a taxpayer dealer liable to pay any tax,
39 penalty or interest assessed pursuant to K.S.A. 79-5205, and amendments
40 thereto, refuses or neglects to immediately pay the amount due, the di-
41 rector of taxation secretary of revenue or the secretary's designee may
42 issue one or more warrants for the immediate collection of the amount
43 due, directed to the sheriff of any county of the state commanding the
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1 sheriff to seize and sell the real and personal property of the taxpayer
2 dealer found within the sheriff's county to satisfy the amount specified
3 on the warrant and the cost of executing the warrant. The director of
4 taxation secretary of revenue or the secretary's designee may also issue
5 one or more warrants directed to any employee of the department of
6 revenue commanding the employee to seize and sell the real and personal
7 property of the taxpayer dealer found anywhere within the state of Kansas
8 to satisfy the amount specified on the warrant and the cost of executing
9 the warrant. A copy of the warrant shall also be mailed to the taxpayer
10 dealer at the taxpayer's dealer's last known address or served upon the
11 taxpayer dealer in person.
12 (b) The sheriff or department of revenue employee shall proceed to
13 execute upon the warrant in the same manner as provided for attachment
14 orders by K.S.A. 60-706, 60-707 and 60-710, and amendments thereto,
15 except as otherwise provided herein. In the execution of a warrant issued
16 to a department of revenue employee, the employee shall have all of the
17 powers conferred by law upon sheriffs. Any law enforcement officer may
18 assist in the execution of a warrant if requested to do so by a department
19 of revenue employee.
20 (c) No law exempting any goods and chattels, land and tenements
21 from forced sale under execution shall apply to a seizure and sale under
22 any warrant.
23 (d) A third party holding funds or other personal property of the
24 taxpayer dealer shall immediately, or as soon thereafter as possible, after
25 service of the warrant on such third party, deliver such funds or other
26 personal property to the sheriff or department of revenue employee, who
27 shall then deliver such to the director of taxation or the director's designee
28 secretary of revenue or the secretary's designee for deposit toward the
29 balance due on the taxpayer's dealer's assessment.
30 (e) The sheriff or department of revenue employee shall make return
31 of such warrant to the director of taxation secretary of revenue or the
32 secretary's designee within 60 days from the date of the warrant. If prop-
33 erty is seized, then the sheriff or department of revenue employee shall
34 also make return of such warrant to the clerk of the district court in the
35 county where the property was seized. A list of the property seized shall
36 be provided to the taxpayer and a copy attached to the return made to
37 the clerk of the district court. No appraisal of the seized property shall be
38 required pursuant to subsection (b)(2) of K.S.A. 60-706, and amendments
39 thereto, unless ordered by the court where the return is filed after a hear-
40 ing requested by the dealer. The cost of such appraisal shall be approved
41 by the court and paid by the dealer.
42 (f) If the taxpayer dealer fails to appeal the assessment as provided
43 by subsection (b) of K.S.A. 79-5205, and amendments thereto, or if the
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1 taxpayer dealer requests a hearing and a final order has been entered by
2 the director of taxation secretary of revenue or the secretary's designee as
3 to the correctness of the assessment, then the sheriff or department of
4 revenue employee shall sell the seized property at public auction. The
5 provisions of K.S.A. 60-2406, and amendments thereto, shall apply to liens
6 against the property being sold. Notice of the sale of personal property
7 shall be given in accordance with K.S.A. 60-2409, and amendments
8 thereto. Notice of the sale of real property shall be given in accordance
9 with K.S.A. 60-2410, and amendments thereto. The taxpayer dealer shall
10 have the right to redeem real property within a period of six months from
11 the date of the sale.
12 (g) The director of taxation secretary of revenue or the secretary's
13 designee may also direct the sheriff or department of revenue employee
14 to file any warrant issued pursuant to subsection (a) with the clerk of the
15 district court of any county in Kansas, and thereupon the clerk shall enter
16 in the appearance docket the name of the taxpayer dealer mentioned in
17 the warrant, the amount of the tax or portion of it, interest and penalties
18 for which the warrant is issued and the date such copy is filed and note
19 the taxpayer's dealer's name in the general index. No fee shall be charged
20 for such entry. The amount of such warrant shall thereupon become a
21 lien upon the title to, and interest in, the real property of the taxpayer
22 dealer located within such county. Thereupon, the director of taxation
23 secretary of revenue or the secretary's designee shall have the same rem-
24 edies to collect the amount of the tax, penalty and interest, as if the state
25 of Kansas had recovered judgment against the taxpayer dealer, including
26 immediately garnishing the wages or other property of the taxpayer dealer
27 pursuant to K.S.A. 60-716 et seq., and amendments thereto. Such rem-
28 edies shall be in addition to the other collection remedies provided
29 herein.
30 (h) The director of taxation secretary of revenue or the secretary's
31 designee shall have the right at any time to issue alias warrants until the
32 full amount of the tax, penalty and interest is collected.
33 Sec. 11. K.S.A. 79-5203, 79-5206 and 79-5207 and K.S.A. 1996 Supp.
34 79-5201, 79-5202, 79-5204, 79-5205, 79-5208, 79-5211 and 79-5212 are
35 hereby repealed.
36 Sec. 12. This act shall take effect and be in force from and after its
37 publication in the statute book.